Eberhard Says ‘Uncle’ in Tesla Lawsuit

No one involved in the suit is saying much, but according to the Silicon Valley / San Jose Business Journal, Eberhard asked a San Mateo County, California, judge to dismiss the suit. We haven’t been able to reach Eberhard’s attorney, Yosef Peretz, but he told the Journal more information about the case could be coming next month.

Tesla spokeswoman Rachel Konrad declined to comment when we got ahold of her. That’s unusual for a company that never hesitates to issue a press release. The fact everyone’s so hush-hush, the Journal writes, “raises the likelihood in the eyes of some observers that a settlement has been reached with Eberhard.”

That’s a valid point. It is unlikely that Eberhard withdrew the suit out of kindness. Either the two sides settled the suit and agreed not to discuss it or they have agreed to mediation or binding arbitration. That would be far cheaper than taking the case to trial.

Whatever the case, it’s the latest twist in a soap opera that began May 26 when Eberhard accused Musk of taking control of the company, orchestrating his ouster in 2007 and attempting to “rewrite history” to take credit for developing the pioneering electric Roadster. His lawsuit accused Musk of many offenses, including libel, slander and breach of contract in alleging that Eberhard was pushed out of the company, wrongfully denied his severance and forced to watch as Musk publicly disparaged him and “compromised Tesla Motors’ financial health.”

Tesla fired back with a motion asking a judge to dismiss the suit, arguing that Eberhard was a poor CEO who “left the company’s finances in shambles.” The company claimed Eberhard’s litany of complaints (.pdf) have no basis in fact. What’s more, the company says, both Eberhard and Musk have a First Amendment right to state, and debate, their versions of the company’s history.

A judge on July 28 refused Tesla’s request to dismiss the suit but did strike down Eberhard’s request to be named one of only two “founders” of the company.

UPDATE 5:30 p.m. Eastern Aug. 20: Elon Musk, in a profile published in New Yorker (subscription req.), says he and Eberhard are considering mediation; Eberhard’s attorney, Yosef Peretz, confirmed to use today that the case is indeed headed to mediation.